A quick note before we begin

This episode was recorded in 2025, when my work was positioned more heavily around financial coaching and Cashflow Confident was my current offer. That programme and the launch mentioned in the original episode no longer exist, so I’ve removed the expired promotion.

The process itself still sits at the centre of my work, because knowing what you need to take home, what the business can afford and what needs to change when those two numbers do not match is not merely a personal finance exercise. It is revenue strategy.

One important distinction before we get into it: I use owner’s pay throughout this article to mean the amount the business needs to provide for you personally. The legal and tax mechanics depend on how your business is structured. A sole trader taking drawings and a limited-company director taking salary or dividends are not the same thing, so agree the actual method with your accountant. This article is about calculating and cashflow-planning the amount, not replacing tax advice.

Listen to the episode

In this episode

If you currently pay yourself in drips and drabs, transfer money whenever your personal account gets a bit squeaky, or technically pay yourself every month but have absolutely no idea whether the number is right, this is the practical bit.

We’re going through how to:

• calculate what you actually need to take home, using real spending rather than a number you think should be enough;
• compare that number with what the business can afford;
• turn any shortfall into a useful revenue target;
• choose a payday and payment frequency that work with your cashflow;
• keep the system going when money is tight or life has made financial admin feel like one task too many.

Paying yourself starts before the bank transfer

You make a sale, the money lands, a bill leaves your personal account and you transfer whatever is needed to cover it. Then another bill arrives, so you transfer a bit more. A week later you buy groceries on the business card because, honestly, at this point the money is all sloshing around together anyway.

By the end of the month, you have taken money from the business. You still could not tell me what the business paid you.

This is what paying yourself willy-nilly looks like. It isn’t necessarily that you never take money out, it’s that there is no agreed number, no payday and no way to see whether the business can repeat it next month.

In Episode 1, we talked about why consistent owner’s pay matters, both because unpredictable personal income keeps you operating from scarcity and because your required pay gives the business a benchmark to build towards. Then, in Episode 2, I walked through the Overflow Formula, the three-part cashflow structure I use to manage the money once it enters the business.

This is the next piece: how much should you actually pay yourself, and how do you turn that number into a routine the business can support?

Step one: find out what your life actually costs

The first job is a personal financial audit, and this is the big daddy task because everything that follows depends on it being based on reality.

Go through the last three months of your personal spending and add up what you actually used. If those three months were wildly unusual, maybe you spent six weeks travelling, moved house or you’re doing this immediately after Christmas, use six months instead. You want enough information to see an ordinary pattern, not a random period that makes your life look twice as expensive or suspiciously cheap.

Check everywhere you spend from:

• your current account;
• personal credit cards;
• PayPal;
• any joint account you contribute to;
• and, if personal spending has crept through the business account, that too.

The more places you use, the more places you need to check. Annoying, yes, but also quite a compelling argument for simplifying what happens next.

Give yourself a decent hour and split the transactions into categories. Start with necessary spending, things like housing, household bills, groceries, travel, fuel, prescriptions and medical costs. For anything that varies, use an average rather than grabbing the nicest-looking month and declaring that your new normal.

Then look at joyful spending. I would break that down too, because one miscellaneous fun category tells you fuck all. How much are you spending on eating out, clothes, beauty, activities, hobbies, days out, subscriptions and the bits of life you genuinely enjoy?

This is an audit, not evidence for the prosecution.

You are not doing it so you can look at the total and go, “Oh my God, I’ve been spending so much money, I’m terrible.” No, fuck off. We’re not doing that. You’re collecting enough accurate information to decide what the business needs to provide.

I have had clients spending around £1,000 a month on flexible and joyful costs tell me they planned to cut that to £200 or £300. Could they technically spend less for a month? Probably. Is reducing it by 70 or 80 per cent overnight a sensible number on which to build their entire financial system? Absolutely not.

If your owner’s pay only works when you become a completely different person with a completely different life, it does not work.

Once you have totalled the categories and calculated an ordinary monthly average, you have your first owner’s-pay target: the amount your current life actually requires.

You can use AI for the maths, but check its work

Some of my clients download their bank statements and use ChatGPT to categorise the transactions or total the figures. It can make a repetitive job much faster, particularly when you have several accounts to combine, and current ChatGPT tools can analyse uploaded spreadsheets.

Buuuuut it is still your financial data and it is still a machine that can get the maths wrong. I know this because I once used it to project revenue during a launch and the numbers were simply off.

If you use AI, remove information it does not need, review the service’s current privacy and data controls, ask it to show every calculation, then check the totals against the source statements. Do not upload three months of transactions, accept one very confident answer and reorganise your entire life around it.

I also think it is worth doing this manually at least once. The point is not only to reach a total, it’s to see what is happening. Clients have changed long-standing financial habits after one audit, not because I gave them a list of things to cut, but because they could finally see the pattern they had been funding.

Awareness changes decisions. A mystery total does not.

Step two: work out what the business can afford

Now we bring the business into it.

In the simplest version of the calculation:

Income − business expenses = profit

Then:

Profit − tax provision = available cash, or what I call overflow

The tax line needs to reflect your actual business structure and expected liability, ideally using a percentage or amount agreed with your accountant. We are not casually guessing the tax bill for funsies.

Compare the available overflow with the owner’s-pay target you found in the audit.

Let’s say your life currently costs around £2,000 a month, and the business regularly has £2,500 remaining after its expenses and tax provision. You can pay yourself the £2,000 and leave £500 in the business to build its overflow buffer.

Ba-bing, ba-boom. Sorted. Move on.

But what if the calculation goes the other way? Your audit says you need £2,000, but the business can only reliably provide £1,500.

That is not a reason to pretend you need less. It gives you a £500 gap, and a gap is useful because you can now work backwards from it.

How much additional revenue does the business need to create £500 more after its costs and tax provision? Which offer can generate it within your actual capacity? How many sales does that require? How many qualified leads does your conversion rate suggest you need?

The personal number becomes a business target, the business target becomes a sales target, and the sales target becomes a plan.

That is why this work is bigger than cashflow admin. Without the owner’s-pay number, you are choosing revenue goals because £5k or £10k sounds appropriately business-y. With it, you know what the revenue is meant to do.

When I first created this system for myself, I started at £1,300 a month, which covered the bare necessities. I then moved it to £1,500. Each time I changed the number, I mapped it through my cashflow tracker first so I could see what the business needed to produce and whether the increase would still leave room for tax, expenses and overflow.

I did not transfer an extra £200 and hope Future Emilie would locate it somewhere.

What if the business cannot pay the full amount yet?

Pay yourself what it can afford consistently, then use the shortfall as information about what needs to change.

If your personal life requires £2,000 and the business is only supplying £1,500, the missing £500 is already being funded somehow. It might be coming from savings, debt, a partner, inconsistent larger withdrawals after launches, or money arriving and leaving at such odd points in the month that you have never seen the shortfall as one clean number.

That does not make it less real. It makes it harder to plan for.

When money is tight, start with necessary bills and spending. After that, my view can feel slightly controversial: I would usually protect some joyful spending before trying to throw every available pound into savings.

This is not because savings do not matter. It’s because a plan that removes every enjoyable part of your life for an indefinite period tends to create a predictable behavioural response. You restrict, feel increasingly deprived, hit the fuck-it point and spend in a way that gives short-term relief, then blame yourself for failing at a plan that was miserable from the start.

An unusually tight month or two can be manageable when you know why it is happening and when it ends. Permanent punishment is not a financial strategy.

The exception I would prioritise alongside joyful spending is a small Breathing Fund, perhaps £500 to begin with and then £1,000. This is not the giant emergency fund that must rescue your whole life. It is for the smaller, deeply normal things that make a precise monthly plan fall over: you forgot a birthday, your child destroyed another item of nursery clothing, the microwave died, or every cleaning and beauty product somehow ran out in the same week because apparently they held a meeting.

That money lets the plan flex without every minor surprise returning to a credit card. Depending on what is available, you can prioritise the Breathing Fund first or split the surplus between that and joyful spending.

The aim is to build a system you can continue while the business closes the gap, not a perfect spreadsheet you abandon by Thursday.

Step three: choose a payday

Once you know the target and what the business can afford, choose when the payment happens.

The first or final day of the month tends to make business cashflow tracking easier, because the payment sits cleanly within the month it relates to. I used to pay myself on the 25th because that was the payday I had in employment, and I carried it into the business without considering whether it made sense.

When I moved my own payday to the final day of the month, the transition was weirdly disorientating. I needed to bridge a month and an extra week, and of course that additional week still contained bills. Oh my God. I had all the numbers, I understood the system, and I still ended up verbally processing the whole thing with Chatty G because sometimes seeing the calculation is not the same as your brain believing it.

I am a verbal processor, which is presumably why podcasting works so well for me. Why I had not remained consistent with it at that point is another question entirely.

Talk the transition through if you need to. Use a spreadsheet, ChatGPT, your partner, your accountant or somebody who understands the system. Map the date of the old payment, the new payment and every personal bill that lands between them, then decide how you will fund the bridge. The awkward transition is a one-off cashflow problem, not evidence that the new payday is wrong.

Monthly pay is not the only valid version

If your business cashflow is currently too tight to hold a full month’s pay until one date, pay yourself weekly or fortnightly.

I worked with a client who needed virtually all of the profit from her business to cover personal spending, so a neat monthly transfer was not realistic yet. We mapped the due dates of every personal bill, added average amounts for food, joyful spending and savings, then created a weekly payment schedule.

One week she might need £1,000 because the rent was due. Another week might only require £200 or £300. The payments were uneven, but they were planned, and that made them very different from opening the business account every few days and taking whatever her personal balance demanded.

Alongside that weekly schedule, we built the sales plan required to increase revenue until the business could support a full monthly payment.

The frequency is not the goal. Predictability is.

Choose the rhythm the business can genuinely maintain now, then design the revenue system that moves you towards the rhythm you want.

Step four: transfer it consistently, even when the system gets scruffy

So, the process is:

1. Audit your real personal spending.
2. Calculate the owner’s pay your life requires.
3. Work out what the business can currently afford after business expenses and tax provision.
4. Turn any difference into a revenue and sales target.
5. Choose a payday and payment frequency.
6. Transfer the money consistently.

Simple does not mean effortless, and it definitely does not mean you will execute it perfectly for the rest of time.

A client once told me she had fallen off the wagon with her financial system. She was overwhelmed, spending from here, there and everywhere, and felt as though she had undone everything. She did not need a fresh 17-tab tracker and a lecture about discipline. She needed one tiny behaviour that returned some visibility.

So, the job was to open the bank account once a day for five minutes. No perfectly categorised transactions. No complete financial admin routine. Look at what was there, notice what had left and check whether the money needed for the immediate future was still covered.

When you are in financial survival mode, the first question is not, “Am I performing the system beautifully?” It is, “Do I have enough money for what needs to happen next, and what decision do I need to make today?”

It is okay for this to be difficult. It is okay to fuck it up occasionally, because we are human. The important part is returning to the smallest useful action without turning the lapse into shame, because shame tends to make you avoid the numbers for longer, and avoiding them removes the information you need to recover.

Five minutes of visibility is more commercially useful than a month of feeling bad about the spreadsheet you are not opening.

The number should connect your life to your sales strategy

Paying yourself consistently is not the final step after you have somehow grown a successful business. It is one of the inputs that tells you what successful needs to mean.

Your personal audit shows what your life costs. Your business cashflow shows what the business currently provides. The gap between them shows what your sales system has to produce next.

Without that chain, the business can make more revenue while your personal account remains as unpredictable as ever. With it, a revenue target has a job, a payday has funding behind it and the money the business makes can start compounding into something more useful than another impressive Stripe screenshot.

Resources mentioned

• Taking money out of a limited company, GOV.UK
• Comparing sole trader and limited-company structures, GOV.UK
• Data analysis with ChatGPT
• ChatGPT data controls
• Business and revenue-planning resources

Continue listening

In Episode 4, we’re talking about paying off business debt, and why the process can actually begin with savings rather than sending every spare pound straight to the balance.

Why Paying Off Business Debt Starts With Savings

Want your owner’s pay built into the business strategy?

Knowing that you need £2,000 a month is useful. Knowing the business currently produces £1,500 is useful too. But unless you connect that £500 difference to your offer, capacity, pricing, pipeline and sales activity, it remains a shortfall you rediscover every month.

Inside Momentum, we work from both ends. We calculate what the business needs to provide for your life, then build the revenue strategy and cashflow system capable of producing it consistently.

Apply for Momentum, and we’ll turn the amount you need to take home into a commercial plan the business can actually follow.